The Full Rankings

The Wall Street Journal's third annual ranking of the top 50 venture-capital-backed companies shows a crop of contenders that overall are focused less on online consumers than in years' past. Emily Maltby has details on The News Hub. Photo: Cheezburger Inc.

The top three ranked companies are all business-product makers: Genband Inc., a supplier of voice-over-Internet-protocol technology to telecom companies; Xirrus Inc., a provider of wireless networking equipment; and Tabula Inc., which makes semiconductors for electronic products.

Several other companies on the list offer products or services designed to help businesses run more efficiently, such as data-storage company Nimble Storage Inc. (No. 26) and business-analytics software provider Marketo Inc. (No. 20), cloud-computing services provider Appirio Inc. (No. 29) and wireless networking company Aerohive Networks Inc. (No. 37).

Unlike in years past, none of the companies on this year's list are in the energy sector, underscoring the challenges faced by that industry. This year was also the first time that a health-care company didn't top the ranking.

To be eligible for the ranking—compiled by research firm VentureSource, which like The Wall Street Journal is owned by News Corp.—companies must be based in the U.S., have received an equity round of financing in the past three years and be valued at less than $1 billion, as the aim is to identify lesser-known start-ups. That excludes a number of high-profile companies, including Twitter Inc., Dropbox Inc., Pinterest Inc. , Airbnb Inc. and Square Inc. More than 5,900 candidates were considered.

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The Wall Street Journal reveals its third annual ranking of the top 50 start-ups in the U.S. backed by venture capitalists.

Key criteria for ranked companies on the list include fundraising success, recent growth in the company's value and the track record of its founders and board members. The editorial staff of Dow Jones VentureWire also reviewed and ranked the start-ups based on their knowledge of the companies' products, competition and financial performance.

Overall, 29 companies are new to the list, reflecting the ever-evolving landscape for technology start-ups, as new contenders outmuscled others for spots. Six of last year's top 50 have held initial public offerings since that list was published in March 2011, while four were acquired.

Last year's top-ranked company, Castlight Health Inc., whose technology allows consumers to run side-by-side comparisons of out-of-pocket medical expenses, dropped out of the top 50 entirely as the health-care industry in general has fallen out of favor with venture capitalists. Pacific Biosciences Inc.,PACB2.71% a genomics sequencing company was No. 1 in the inaugural 2010 ranking before holding an IPO later that year.

The number of ranked health-care companies fell to five, from eight last year. Two medical product makers—Glaukos Inc., which treats glaucoma by implanting a small device in the eye, and NeuroPace Inc., maker of anti-epileptic-seizure systems—jumped up more than 10 spots in the rankings to come in at No. 7 and No. 8, respectively.

The Top 10 Venture-Backed Companies

A closer look at the companies that topped this year's Next Big Thing list.

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Companies on the list ranged from fresh start-ups to mature concerns. The youngest start-up was domain-name manager Donuts Inc., which started last year. The oldest company was NeuroPace, founded in 1997.

The amount of venture funding these companies received also ranges greatly, from $26.6 million for UberMedia Inc., a developer of Twitter apps, to more than $500 million for Genband, which makes its debut atop the ranking.

Genband counts telecom providers like Sprint Nextel Corp.T-0.17% and Comcast Corp.CMCSA0.08% among its 600 customers for its VoIP technology. Its products include "Call Grabber," which allows a user to transfer a voice or video call from a land line to a mobile device or broadband-enabled TV.

The 1,700-employee company is among the oldest listed, having been founded in 1999, and has built itself in part by acquiring multiple companies—including two that were four time its size in revenue. Those rollups have helped boost its revenue to more than $700 million in 2011.

Chief Executive Charlie Vogt, who joined in 2004, said Genband has no immediate plans for an IPO. "A lot of companies go public because they're trying to raise money, and in our case, we don't need to raise money," he said. "We're just trying to continue to keep putting our heads down and build the best company we can."

Genband, which is based in Frisco, Texas, scored high marks due partly to its large fundraising haul from a mix of top venture capital, private equity and corporate investors, including One Equity Partners, Sevin Rosen Funds, Intel Capital, Oak Investment Partners, Siemens Venture Capital and Venrock.

For the second year in a row, Xirrus holds the No. 2 spot. The wireless networking company, which came in No. 9 in the 2010 ranking, benefits partly from the background of its founder, Dirk Gates, who took his previous company, Xircom, public before selling it to Intel Corp.INTC0.14%

The company's existing investors August Capital, Canaan Partners, InterWest Partners, QuestMark Partners and US Venture Partnersdoubled down on the company this week with an additional $23.5 million in financing.

The No. 3 spot went to another company making its debut—chip maker Tabula, which is backed by a roster of venture heavyweights including Benchmark Capital, Greylock Partners and New Enterprise Associates. Tabula's founder, Steve Teig, previously launched four other technology companies, two of which he took public.

Despite a pullback by investors from Web start-ups in the wake of disappointing IPOs for Facebook Inc.FB-1.26% and Zynga Inc.,ZNGA0.40% consumer Internet companies are sprinkled throughout the list. These include lifestyle content company Glam Media Inc., crafts marketplace Etsy Inc. and videogame network Machinima Inc.

The Seattle company, which has roughly a hundred employees, publishes more than 60 humor sites, including FAIL Blog, which highlights random acts of stupidity. The sites receive an average of 15,000 photo and video submissions a day.

"We have a mission to make the world happy for five minutes a day," said CEO Ben Huh, who is 34 years old. The South Korea native started Cheezburger in 2007 shortly after getting out of $40,000 in credit-card debt resulting from a failed start-up.

Cheezburger gets the bulk of its revenue from selling advertising, with the rest coming from licensing deals and sales of merchandise, such as calendars, T-shirts and magnets.

Most of the companies—37 out of 50—are based in California where the largest share of venture capital is invested, while four are in New York and three are in Massachusetts. Five other states, including Washington, were represented.

Corrections & Amplifications Michael Hatfield is the president of Cyan Inc. The table accompanying a previous version of this article incorrectly identified him as Cyan's CEO, a title he previously held. Also, the table for RockMelt Inc., which makes a social Web browser, had incorrect text under the category labeled "Why It's Hot." The description should have read: "Its social Web browser continuously displays information from Facebook, Twitter and news feeds."

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